LIVESTOCK-US live cattle futures sag ahead of USDA report

* Cattle data seen neutral to futures on Monday
    * Feeders drop in tandem with live cattle futures
    * Fund selling, pig disease guide CME hogs lower

    By Theopolis Waters
    CHICAGO, May 17 (Reuters) - Chicago Mercantile Exchange live
cattle futures closed lower on Friday as traders adjusted
positions ahead of the U.S. Department of Agriculture monthly
cattle-on-feed report that was released after the futures
closed, analysts and traders said.
    Analysts called the report neutral for futures on Monday as
its supply numbers were nearly in line with trade estimates,.
    "We pressed the market all week so we have to see how much
of the report is dialed in," said U.S. Commodities analyst Don Roose. Ideas that cash cattle and wholesale beef prices are near their seasonal peak generated more selling in CME live cattle futures' selling. Cattle also were pressured by CME lean hogs, which slumped after USDA's National Veterinary Services Laboratories detected porcine epidemic diarrhea (PEDV) in Iowa's hog herd. The virus is not a food safety concern and does not affect humans, a USDA spokesman said. "I think uncertainty for both markets, cattle and hogs, suggests traders were spooked by what at first was a rumor about the hog disease," a trader said. CME live cattle extended their weekly losing streak to three after finishing down 0.87 percent for the week. June cattle closed at 119.400 cents, down 0.500 cent per lb. and set a contract low of 118.700 cents in after-hours trading. August ended 1.175 cents lower at 118.550 cents before drifting to a contract low of 118.375 cents in after hours trading. Despite record-setting wholesale beef values and profitable margins, packers resisted paying up for cattle given futures' steep discount to recent cash returns. This week, cash cattle in the U.S. Plains traded at $124 to
$125 per cwt versus mostly $126 to $127 last week, said feedlot sources. USDA wholesale price of choice beef, or cutout, on Friday was $209.51 per cwt, surpassing the previous record of $208.99 set Thursday morning. U.S. beef packer margins on Friday were estimated at a positive $69.80 per head, compared to a positive $67.15 on Thursday and a positive $36.25 a week ago, according to Feeder cattle futures closed in tandem with the lower live cattle market. CME feeder cattle ended the week down 0.65 percent, losing ground for a third consecutive week. May feeder cattle settled at 133.900 cents, down 1.125 cents per lb. It drifted to a contract low of 133.525 cents in after-hours trading. August settled at 143.375 cents, 1.750 cents lower and set a contract low of 143.075 cents. HOGS SLUMP AMID PIG VIRUS CME hog futures settled lower on profit taking and the PEDV pig virus outbreak in Iowa, said traders and analysts. The selloff sank June and July futures below key moving averages, triggering further speculative selling and fund liquidation. "We haven't run into that much of it (PEDV) as far as an issue, so I'm trying it figure out why it popped up today," said U.S. Commodities analyst Don Roose.
He said the hog disease was not a "big talking point" in the futures market but that uncertainty about its potential impact prompted selling. A trader said some investors sold nearby hog contracts and bought deferred months. They believe the disease might prompt producers to sell hogs ahead of schedule resulting in fewer supplies later in the year. "The market was already under pressure in anticipation of cash hogs and pork prices putting in a seasonal top soon. Packers are also trying to reverse margin losses by cutting kills," he said. CME hogs ended 0.52 percent lower for the week, breaking a five-week win streak. June hogs settled 1.350 cents lower to 91.525 cents per lb. It closed just shy of the 20-day moving average at 91.53 cents. July closed at 90.975 cents, or 1.575 cents lower and below the 40-day moving average of 91.11 cents. The government's Friday afternoon mandatory wholesale pork price, calculated on a plant-delivered basis, was $93.48 per cwt, up 12 cents from Thursday. The average hog price on Friday in the most-watched Iowa/Minnesota market was $89.43 per cwt, 80 cents lower than on Thursday. (Editing by Bob Burgdorfer)

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